Skip to Content News Archives Economy Energy Oil & Gas Renewables Electric Vehicles Mining Commodities Agriculture Real Estate Mortgages Mortgage Rates Finance Banking Insurance Fintech Cryptocurrency Work Wealth Smart Money Wealth Management Investor Personal Finance Family Finance Retirement Taxes High Net Worth FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials More Innovation Information Technology FP500 Podcasts Small Business Lives Told Tails Told Shopping Financial Post Store Obituaries Place a Notice Advertising Advertising With Us Advertising Solutions Postmedia Ad Manager Sponsorship Requests Classifieds Place a Classifieds ad Working Profile Settings My Subscriptions Saved Articles My Offers Newsletters Customer Service FAQ News Economy Energy Mining Real Estate Finance Work Wealth Investor FP Comment Executive Women Puzzmo Newsletters Financial Times Business Essentials HomeFP CommentJack Mintz: How do we stop business and capital from heading south?Continued trade uncertainty is doing our economy no favoursLast updated 1 hour ago You can save this article by registering for free here. Or sign-in if you have an account.Unless we deal with U.S. trade soon, we are more likely to follow Europe’s slow growth than turn back to economic dynamism. Photo by Matthew Sherwood/PostmediaAlarm bells went off when KPMG reported last week that 42 per cent of 275 manufacturers it surveyed have already abandoned Canada or have shifted or plan to shift production to the United States. Statistics Canada tells a similar story, with manufacturing GDP falling by 4.1 per cent, with a net loss of 60,000 jobs, since U.S. President Donald Trump began his second term.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorAs if that weren’t bad enough, trade uncertainty has worsened since the KPMG survey was taken in May. The U.S. has decided not to extend the Canada-U.S.-Mexico Agreement. That means annual reviews for the next decade, which will discourage investment in Canada even further.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againBut is that the whole story? U.S. tariffs have been a major factor hurting Canada’s trade-exposed manufacturing sector, which sends 70 per cent of its exports to the U.S. But Canada’s lack of competitiveness is also a formidable challenge.Canada has always benefited from trade with our closest market. Our GDP per capita has generally grown in parallel with the U.S., though we have underperformed at times. In the 1990s growth suffered as we adopted austerity to fix our enormous public deficit problem and raised interest rates to get inflation down. It suffered again after 2015 with low commodity prices and over-burdensome regulations and taxes.On the other hand, with the U.S. tech sector having almost doubled in size since 2018, there’s no reason not to expect benefits from future trade with the U.S. Our CUSMA partner, Mexico, has seen its exports to the U.S. rise by 24 per cent since January 2025 as multinationals shifted their supply chains to take advantage of CUSMA arrangements in a low-cost economy.Since the beginning of 2025, however, our exports to the U.S. have fallen — if only marginally — despite rising oil and gas mining exports). With Trump’s steep tariffs on autos, lumber, aluminum, steel and non-CUSMA products, expect more companies to jump over the wall to invest in the faster-growing U.S. market to minimize future risks. But there clearly has been damage.It is not just Canadian manufacturing, with its 1.9-million employees, where output and employment have fallen this past year and half. Eight of our 18 industries have also contracted, although not as much as manufacturing. The education sector, with over 1.5-million employees, is down 2.4 per cent in both GDP and employment. Professional scientific and technical services, with two-million employees, has seen output fall 0.6 per cent and employment by 0.8 per cent. Construction output has fallen 0.2 per cent, construction employment 0.9 per cent.Overall, the goods sector (resources, utilities, construction and manufacturing) has seen GDP fall 0.8 per cent and employment one per cent. On the other hand, services GDP is up 1.2 per cent and employment 0.6 per cent since Trump returned to office. This has enabled the modest overall growth that has taken place: 0.5 per cent in GDP and 0.3 per cent in employment over a year and a half.Most of the overall increase in GDP and employment has come from four sectors: health and social assistance, finance and real estate, transportation and, of course, public administration. On its own, health and social assistance has accounted for almost 90 per cent of employment growth in services. As for the rest, strong stock markets and money creation have boosted the financial sector, while subsidies and modest deregulation have supported housing. Not only are these sectors less trade-exposed, they have also been favoured by government policies.As for the next few years, don’t hold your breath waiting for a resurgence of growth. Ottawa is running large deficits, with more spending to come (on defence, for example). In the short term, spending may buoy aggregate demand. But global investors see growing risk from public and private debt that is already 350 per cent of GDP, so higher future bond rates may eventually choke off deficit-led growth.The Carney government also has an aggressive plan to attract investment for major projects, reversing the outflow of capital experienced in the past decade. But his approach is to reduce regulatory and permitting delays for selected projects, not comprehensive reform to remove obstacles to private-sector growth. A year in, none of the major projects has yet been given final approval. And even when they get it, we won’t see any big bang to the economy for several years since permitting, Indigenous consultation and construction will take some time. Some projects — high-speed rail, the Churchill port expansion and a pipeline to the B.C. coast — may well not happen at all.If we continue to stall trade negotiations through Donald Trump’s remaining two-plus years, businesses won’t wait to make hard capital allocation decisions. And a new U.S. administration will bring more economic uncertainty, at least in the short term, even if in the long term it returns policy to more conventional terms. Unless we deal with U.S. trade soon, we are more likely to mimic Europe’s slow growth than return to economic dynamism.That would be bad on us. Join the Conversation This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.